The Accounting Cycle

By: Evan Greenplate

Step 1- Analyzing Transactions

In this first step the accounting equation was introduced and so were our three major accounts, assets, liabilities and owners equity. We also learned the Normal Balance of these accounts.

Step 2- Journalizing

Journalizing is when a transaction is recored in a business journal. Every time a transaction is recored the debits and the credits must balance.

Step 3- Posting

Posting is when the information is the general journal is transferred to the general ledger. The ledger consists of all the accounts used by the business and their balances.

Step 4- Preparing a Worksheet

Worksheets are used to prepare accounting information. The worksheet consists of a trial balance, adjustments, income statement, and a balance sheet.

Step 5- Preparing Financial Statements

To prepare a financial statement, you use the the information from your worksheet to create an income statement and a balance sheet. The income statement consists of your revenue and expenses, while the balance sheet is your assets, liabilities ,and owners equity.

Step 6- Journalizing Adjusting and Closing Entries

When journalizing the adjusting and closing entries you journalize them in your general journal. The main reason to journalize your closing entries is to clear out your temporary accounts for the month.

Step 7- Posting Adjusting and Closing Entries

The main difference between step 6 and 7, is instead of journalizing in a general journal, you are posting your adjusting and closing entries in your general ledger.

Step 8- Preparing a Post Closing Trial Balance

When Preparing a post closing trial balance your are making sure the your debits and your credits still equal and the end of the accounting cycle.
The Accounting Cycle